Due to record-high inflation, the Fed’s aggressive rate hikes, geopolitical uncertainty, and growing recessionary fears, technology stocks suffered a devastating sell-off last year. However, according to Wedbush analyst Dan Ives, the tech sector will rally by 20% in 2023.
Moreover, rising investments and growing demand for innovative tech solutions should help quality tech stocks see significant gains in the long run.
According to the CNBC Technology Executive Council poll, 74% of tech executives expect their companies will spend more on new technology this year even as the industry suffers massive layoffs.
In addition, the global Information Technology (IT) industry is estimated to reach $6.2 trillion by 2028, growing at a 4.5% CAGR.
Given the backdrop, investors might consider buying fundamentally sound tech stocks Jabil Inc. (JBL), Box, Inc. (BOX), and Celestica Inc. (CLS) in 2023.
Jabil Inc. (JBL)
JBL offers products and services for manufacturing all over the world. The company operates in two segments, Electronics Manufacturing Services, and Diversified Manufacturing Services.
In terms of forward EV/Sales, JBL is currently trading at 0.37x, 86.3% lower than the industry average of 2.72x. Its forward Price/Sales of 0.31x is 89.2% lower than the industry average of 2.83x.
JBL’s trailing-12-month ROCE of 41.31% is 767% higher than the 4.75% industry average. Its trailing-12-month ROTA of 4.77% is 213.9% higher than the 1.52% industry average.
JBL’s net revenues came in at $9.64 billion for the fiscal first quarter ended November 30, 2022, up 12.5% year-over-year. Its gross profit increased 10.1% year-over-year to $743 million. Also, its operating income increased 3.4% year-over-year to $362 million.
Mark Mondello, Chairman and CEO, said, “Our Q1 FY23 performance was outstanding. I remain confident in our plan moving forward, supported by both strong secular tailwinds and continued refinement of our more traditional businesses.”
Analysts expect JBL’s revenue to increase 3.1% year-over-year to $34.51 billion in 2023. Its EPS is estimated to rise 9.5% year-over-year to $8.38 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past six months, the stock has gained 47.8% to close the last trading session at $81.04.
JBL’s POWR Ratings reflect this promising outlook. It has an overall A rating, equating to a Strong Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Value, Sentiment, Momentum, and Quality. Within the Technology - Services industry, it is ranked #2 out of 81 stocks. Click here to see the additional POWR Ratings for JBL (Growth and Stability).
Box, Inc. (BOX)
BOX provides a cloud content management platform that enables organizations of various sizes to manage and share their content from anywhere on any device.
BOX’s trailing-12-month Price/Cash Flow of 15.81x is 12.8% lower than the industry average of 18.14x.
Its trailing-12-month gross profit margin of 73.52% is 48.5% higher than the industry average of 49.53%. Its trailing-12-month levered FCF margin of 31.22% is 316.1% higher than the industry average of 7.50%.
BOX’s revenue increased 11.6% year-over-year to $249.95 million for the third quarter ended September 30, 2022. Its gross profit came in at $185.46 million, up 15.2% year-over-year.
Moreover, its EPS came in at $0.03, compared to a loss per share of $0.12 in the year-ago period. Also, its net cash flow from operating activities came in at $69.73 million, representing an increase of 51.3% year-over-year.
Street expects BOX’s revenue to increase 13.3% year-over-year to $990.62 million in 2023. Its EPS is estimated to grow 37.6% year-over-year to $1.17. The stock has gained 27.2% over the past year to close the last trading session at $31.53.
BOX’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which indicates a Strong Buy in our proprietary rating system. It also has an A grade for Growth and Quality and a B for Value.
BOX is ranked #4 in the same industry. Click here for the additional POWR Ratings for Stability, Momentum, and Sentiment for BOX.
Celestica Inc. (CLS)
Headquartered in Toronto, Canada, CLS provides hardware platform and supply chain solutions in North America, Europe, and Asia. It operates through two segments, Advanced Technology Solutions; and Connectivity & Cloud Solutions.
On October 24, 2022, Rob Mionis, CLS’ President and CEO, said, “The strong performance in recent quarters continues to be driven by new project ramps in our ATS segment and strong demand with market share gains in our Hardware Platform Solutions business.”
CLS’ forward EV/Sales of 0.28x is 89.6% lower than the industry average of 2.72x. Its forward Price/Sales of 0.22x is 92.3% lower than the industry average of 2.83x.
Its trailing-12-month ROCE of 8.88% is 86.9% higher than the industry average of 4.75%. Its trailing-12-month ROTA of 2.52% is 66.1% higher than the industry average of 1.52%.
CLS’ revenue came in at $1.92 billion for the third quarter that ended September 30, 2022, up 31.1% year-over-year. Its net earnings came in at $45.70 million, up 29.8% year-over-year, while its EPS came in at $0.37, up 32.1% year-over-year.
CLS’ revenue is expected to come in at $7.57 billion in 2023, representing a 5.7% year-over-year rise. The company’s EPS is expected to increase 8% year-over-year to $2.03 in 2023. It surpassed EPS estimates in all four trailing quarters. The stock has gained 42.5% over the past three months to close the last trading session at $13.18.
It’s no surprise that CLS has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Growth and Sentiment and a B for Value and Momentum.
CLS is ranked first in the Technology - Services industry. To see the additional POWR Ratings for CLS (Stability and Quality), click here.
JBL shares . Year-to-date, JBL has gained 18.83%, versus a 4.76% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
3 Tech Stocks You Don’t Want to Miss out on in 2023 StockNews.com
